Social Desirability Bias: How Psych Can Salvage Econo-Cynicism

The strongest evidence against the economic way of thinking is the way that people describe their own behavior. People rarely announce, "I'm looking out for number one." Businesses rarely advertise, "Our own profit is our top priority." Students rarely declare, "I just look for easy A's." Workers' resumes rarely identify their career goal as, "Money!" To hear a CEO trumpet, "I'm retiring to have more time with my material possessions," you must turn to The Onion.

Economists have a long-standing defense mechanism against this mountain of evidence: Behaviorism. Milton Friedman told us you can't believe what people say. Many of us still believe him. But this position isn't just self-refuting; it's absurdly dogmatic. Virtually every person alive professes noble aims, so economists invoke the methodological principle that "Words count for nothing"? If that's our best response to ubiquitous empirical evidence, the world is right to dismiss us as a cult.

Fortunately, there is a far more compelling response... with one big catch: Economists have to outsource their intellectual defense to psychologists. Like economists, psychologists are deeply skeptical about mere words. They too hold a cynical view of human nature. To defend it, though, they don't rely on half-baked philosophy of science. Instead, they carefully measure and compare the divergence between what people say and what they do.

Social desirability bias is the tendency of respondents to
answer questions in a manner that will be viewed favorably by others. It
can take the form of over-reporting "good behavior" or under-reporting
"bad," or undesirable behavior. The tendency poses a serious problem
with conducting research with self-reports, especially questionnaires.
This bias interferes with the interpretation of average tendencies as
well as individual differences.

Topics where socially desirable responding (SDR) is of special
concern are self-reports of abilities, personality, sexual behavior, and
drug use...

Other topics that are sensitive to social desirability bias:

Personal income and earnings, often inflated when low and deflated when high.

Why is the psychologists' approach so superior to the economists'? Simple. Economists reject all-pervasive testimony on lame methodological grounds. Psychologists, in contrast, aggressively cross-examine this all-pervasive testimony, and empirically expose its all-pervasive perjury. Despite what they say, people really are selfish, businesses really are greedy, students really are lazy, and workers really are materialistic. Econo-cynicism has a firm basis in psychological fact.

Of course, a "firm basis in fact" is hardly the same as "unvarnished truth." Some deviations from narrow self-interest handily survive cross-examination. Voting really is largely unselfish, workers really do obsess about nominal pay, and managers sincerely hate firing anyone. The point, though, is that the economic way of thinking is on much stronger empirical ground than economists themselves have managed to demonstrate. Though we've often belittled psychology, it's ably served us for decades. Perhaps if economists give psychologists some much-deserved credit for Social Desirability Bias, they'll be more eager to vouch for the value of what we do.

Is this a bias in the same sense as, say, "representativeness" and the other Kahneman-Tversky classics?

This bias says you will deceive people as a result of or to the extent that the costs of speaking the truth are greater than the benefits. It is not strictly speaking a learning or inference bias from the standpoint of the individual. Unless, however, you confine this to self-deceit.

I don't see anything "lame" about the standard econ justification here. More like "common sense"—"actions speak louder than words," that's the old saying.

Of course, you can't just dismiss what people say *a priori*, you have to actually look at the evidence and document how it deviates from their actual behavior. But once you've shown how people's actions routinely deviate from their professions? Yeah, it makes a lot of sense to give the actions more weight.

My college experience was different. Many students bragged about taking "Mickey Mouse" courses. The "easy A" professors were well-known. I found that information useful: I avoided their classes.

My professional colleagues (pathologists) often truthfully state that their career goal is an interesting and challenging job.

I've read about retiring CEOs who said that they were going to enjoy life, travel, sail around he world, climb mountains, etc.

Plenty of people engage in what Dr. Caplan calls "the economic way of thinking." I disagree with that label. I call this the "I see nothing wrong with being truthful about this subject." label.

...you can't believe what people say.

Medical school taught us that all people lie. When we take a medical history from a patient or relative, we assume that there will be deliberate lies.
Q: Tell me about your use of the prescription medicine.
A: I took it three times a day for a week.
Interpretations: 1. Didn't even buy medicine, 2. Took it fewer times per day, 3. Didn't take it for a week, 4. Took it as prescribed.
Physicians spend much time getting the truth. In this case extra questions such as "How did you feel after taking the medicine." and "What happened to the color of your urine." are necessary to determine the truthfulness of the answer.

There was an experiment on glucose monitoring and the handwritten logs patients brought to the doctor. The patients did not know their new glucometers recorded all readings. 95% of patients falsified their logs. Most said they didn't want to disappoint their doctors about not complying with diet and medicine use.

My point is that we sometimes overestimate the prevalence of lying. At other times we have to assume that lying occurs nearly all the time. In the medical field, the high frequency of lying carries high costs to providers and patients.

I really don't think there is anything controversial about "the economic way of thinking," at least at the individual level. In general, all we are really assuming is that when people are faced with a choice between multiple actions/outcomes, they choose the one that is most preferred. This is essentially axiomatic, any attempt to view human behavior in a way that contradicts this boils down to adopting an alternate definition of "preferred."

The refutable implications only come in when we try to imagine exactly what people prefer. But I don't think "the economic way of thinking" really hinges on those assumptions. For instance, to the extent that people are assumed to be "selfish," this is only done because it is easy to conceptualize and is believed to be a decent approximation of peoples' preferences in whatever case is under consideration. But there is nothing baked into the theory of consumer (or any other individual) choice that causes the whole thing to collapse if their preferences include things other than piling up wealth and material possessions.

The one case in which there is a testable hypothesis is with "the firm" where it is typically assumed that the firm tries to maximize profit. This can, at least potentially, be observed. But saying (and showing) that they care about other things may have an indirect effect on profits so it is difficult.

Of course, if firms are doing something else, it doesn't amount to a fundamental flaw in the "economic" way of thinking about individual behavior but an imperfection in the incentive structure of firms. Every individual is still pursuing what they consider the most preferred of their options, those options may just not match up perfectly with the profit of the firm.

Great, great comments. We need economists to say the same thing over and over. When progressives boycott a firm (even for stupid reasons) they are being economic beings. When we go to a store because the clerk is cute, we are being economic beings. When we buy something because we don't like the person who said the product is bad, we are being economic beings. All this is hard for economists to quantify, but it still follows theory.

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